Originally Posted by
OzzyOzBorn
Just putting a question out there to the PPRuNe talent pool ... I don't purport to know the solution!
We know that MOL has been understandably voicing concerns over the potential impact of new US tariffs affecting aircraft orders and deliveries from Boeing. There have been suggestions that some early deliveries could be refused, in order to ensure that tariffs are not incurred. I've just been thinking about potential solutions to circumvent this problem; whether or not either of them would be in any way feasible is open to conjecture. Just putting some ideas out there to consider ways in which the impasse could be circumvented.
1) A wide-ranging new trade deal between the US and the UK was announced earlier this week. Would allocation of new B38M's to Ryanair UK (and delivering direct to them) bypass reciprocal tariffs imposed against the US by the EU? Would allocating these aircraft to the Ryanair UK subsidiary come with extra costs anyway, over and above what would be routinely anticipated? In the short term, the 15 Boeing 737-8AS units currently operating for Ryanair UK could be cascaded back to the EI-, SP-, 9H- fleets without tariffs to offset the first fifteen tariff-impacted deliveries?
2) Would it be an option to sell the outstanding B38M orders to a US leasing company with an agreement to lease them and buy them back at a later date (subject to tariff renegotiations at government level)? Do aircraft coming across from the US on lease themselves incur tariffs, even if the aircraft is not being purchased by an entity domiciled within the EU?
I don't know whether these options are feasible, or whether some of you can suggest better ideas (or further obstacles), but a solution which means no backlog of undeliverable Ryanair B38M's going to storage in a desert would be beneficial all round. Only competitors will benefit from a hamstrung Ryanair, unable to expand beyond it's present fleet size for months or years ahead.
Any thoughts?
1. It's not a wide ranging trade deal if you are referring to the agreement reported on the 8th May, it's just agreements to lower some of the tariffs Trump had put in place going into the USA.
But on your point the UK has no Customs Duty on any aircraft. The same with the EU currently so no issue.
The EU however are very active in pushing for retaliatory tariffs including on aircraft.
If, in theory the EU retaliated with tariffs on Boeing but the UK doesn't the tariff is specific to the named country (USA) so you can't bring goods in and bypass the tariff by routing the good via the UK.... same applies to older aircraft... so you can't transfer old stock without incurring the duty. Unless they specify that it is on new aircraft only.
2. If there were tariffs then the leasing agreement would attract the tariff and not the purchase cost/value of the aircraft. This gets a bit more complicated and difficult to explain on how you calculate the value.
The company who 'imports' will still have to pay the relevant tariffs and import VAT, now this could be the leasing company (owner) or the company leasing (hiring) of the aircraft.
Airbus got round tariffs in the USA a few years ago, when Airbus and Boeing were both accusing each other of subsidies, by building plant in the USA for A320s.
All in all though your question in the current situation where neither the UK or the EU have any tariffs on US aircraft is null and void, but it maybe interesting on what happens if they do implement retaliatory tariffs both here or in the EU. The question is how have Boeing sold the aircraft, what are the terms in the contract? Same with leasing companies!
Hope this answers your questions.